Discover Finds First Week Bumpy

Discover Financial Services has watched its stock price drop in its first week of trading, in stark contrast to the performance of one of its primary competitors.

Discover (NYSE: DFS) went public on Monday with an initial share price of $29.  Since then, it’s been downhill, as the U.S.’s #4 credit card company saw traders send its share price down to $25.50 in early trading Friday.  Investment banking firm Morgan Stanley spun off Discover after owning the credit card issuer and transaction network for 10 years.

Morgan Stanley had long discussed selling or spinning off Discover because its returns lagged other divisions.  In April 2005, Morgan said it would spin off the brand, but later changed course and said it would keep Discover. In December of last year, Morgan changed its mind again and said that Discover would, indeed, be spun-off into a standalone public company.

The drop in share price this week stands at odds with the Wall Street performance of rival MasterCard since it went public more than a year ago.  MasterCard is the second largest card issuer in the U.S.

MasterCard (NYSE: MA) debuted on the New York Stock Exchange at $39 in May 2006.  The card company saw its share price rise more than 10 percent in its first week of trading.  Although there were dips in share price the first couple of months, MasterCard’s stock has steadily risen since September 2006 to its current trading level of around $160 per share.